Johannesburg - Africa's telecoms giant MTN has confirmed that it lost almost two million subscribers in South Africa in the six months to June and service revenue growth slowed by 3.3 percent in a stubbornly weak economy.
According to MTN, the decline was due to its high data rates resulting in price sensitive consumers opting for cheaper data offerings from other competitors.
MTN chief executive Rob Shuter said the organisation now has 1.1 million fewer active data subscribers, although post-paid customers increased marginally by 0.1 percent to 5.6 million.
He added that the 1GB promotion had contributed to the decline.
“We had our famous 1GB promotion, which we decided was not generating value and we pulled it out of the market. A lot of those SIMs have since become dormant and contributed to the drop in prepaid users,” said Shuter.
Shuter added that Cell C had also contributed to its loses for failing and or delaying payments under its roaming agreement with MTN resulting in a R393-million impairment.
“We are evaluating a sustainable solution to the agreement with Cell C. We all know that Cell C has had some cash flow issues and they have fallen behind in some of the payments they owe to MTN,” Shuter said.
While MTN hopes to receive payment from Cell C in future, there seems to be a difference of opinion regarding the outstanding bills as Cell C’s chief financial officer Zaf Mahomed denied that they owed MTN.
“Aspects of the current roaming agreement were recently renegotiated, and this has led to a reduction in roaming obligations. Cell C is not able to comment on the financial accounting of these obligations by MTN,” he said.
The domestic prepaid service revenue declined 5.5 percent on the introduction of out of data bundle rates and regulations by the Independent Communications Authority of South Africa (Icasa).
Commenting on the recent release of the policy on high-demand spectrum and policy direction on the licensing of a Wireless Open Access Network, Shuter said it was a move in the right direction.
“We are still not clear how much spectrum will be available to mobile operators,” said Shuter.
Overall the MTN group had strong subscriber growth of 7.7 million in the first six months of the year to reach a total of 240 million subscribers.